[Calc Review] Help me analyze this deal for a Detroit duplex

[Ben Layman]

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Would you guys do this deal? Located in the Russel Woods neighborhood of Detroit. The rehab could be anywhere from $50k-$75k.

*This link comes directly from our calculators, based on information input by the member who posted.

[Drew Sygit]

@Ben Layman some of your assumptions are also off.

Would NOT recommend using 5% vacancy factor anywhere but a Class A market. Depending on where this property is in Russell Woods, it's either Class C or low Class B (at best). Your vacancy should also encompass nonpaying tenants and evictions. So, at least 10% should be used, if not 15-20%.

$100/monthly for insurance is also low. If this is your only property in Metro Detroit, you won't qualify for a blanket policy and will most likely have to use Foremost. Will be at least $1800 annually or $150/month, probably closer to $2400 annually.

Where did you get the property tax numbers? Michigan has a unique property tax structure that you should know to avoid bad assumptions.

Overall, if you're buying this and willing to believe a wholesaler's claims about ARV and such, then you probably shouldn't be investing out-of-state because you're setting yourself up to be screwed.

Either:

1) Cut your teeth investing in your backyard

2) Start building your OOS team BEFORE you buy anything

3) Buy in the Ring Cities of Metro Detroit, which have less risk than the City of Detroit.

You might want to follow our blog here on BP as we write extensively about the Metro Detroit market.
https://www.biggerpockets.com/member-blogs/3094-royal-rose-properties